“Rich people play the money game to win.”
That's an observation from T. Harv Eker who makes his living studying the successful habits of the rich. The motivational speaker and author of the 2005 book, "Secrets of the Millionaire Mind," no doubt already knew that a lot of rich people don’t pay income tax. And while the rest of us may have assumed that the wealthy probably didn’t pay a lot of taxes, it was still breathtaking to read the recent New York Times story documenting the rich businessmen and corporate leaders who don’t pay any income tax. The story also emphasized the way the uber-wealthy circumvent paying taxes is absolutely legal. As the millennials say,” Don’t hate the player, hate the game.”
In this case, the IRS game is simple: The way to pay no taxes is to have no income. Huh? You may be saying, these people make millions, billions in some cases. Yeah, they do, but not in income. They don’t take a salary; their wealth is in capital gains — stocks, real estate, personal property, collectibles. What’s more, a lot of the wealthy strategically live in one of the 9 states where there are also no state taxes. Double legal loopholes. Meanwhile, the rest of us who work for others — even residents of tax-free Florida, New Hampshire or Texas — can’t entirely escape Uncle Sam’s tax man, because our primary earnings are our salaries.
The Times report comes as the economy is struggling to come back. Working people or those trying to work are squeezed by higher rents, food prices and no affordable child care. During the pandemic when so many lost jobs and businesses, the rich got richer — literally. According to the Program on Inequality from the Institute for Policy Studies, the world’s 2,365 billionaires earned 54 percent more — a collective $4 trillion of new money added to their capital gains. So, when billionaire McKenzie Scott gave away about $6 billion in 2020 to charities and institutions, she earned the money back as fast as she could donate it. Scott, who built Amazon with ex-husband Jeff Bezos, has pledged to give away most of her money while she is living. Last week she gave away nearly $3 billion. To date, she has given gifts to 786 universities, grass roots groups, and arts and civic organizations, saying, “It would be better if disproportionate wealth were not concentrated in a small number of hands.”
Of course, this is much more than a philosophical discussion. More taxes from the wealthy would translate into a bigger pool of tax monies to fund education, defense spending, the social safety programs which pandemic-crippled cities and towns relied on, as well as the stimulus packages for citizens and small businesses.
This couldn’t be better timing to push through the so-called millionaire’s tax, a Massachusetts ballot initiative first considered in 2018. After many fits and starts, this time statehouse lawmakers approved the constitutional amendment adding a 4 percent surtax on annual personal income above $1 million. If the voters say yes to the surtax, officially named the Fair Share amendment, an estimated $2 billion more will be added to public coffers, targeted to schools and transportation. This is long overdue says Winchester State Senator Jason M Lewis, co-sponsor of the amendment, adding that middle class and lower-income residents have been carrying the tax burden and “they are tapped out.”
Voters get a chance to weigh in next year in November. I’m bracing for the intense public debate leading up to the ballot. No doubt there will be a lot of back and forth about whether a wealth tax really makes sense especially if the wealthy can still find another way to bank money outside of the IRS’ grasp. This is how capitalism works, but it really is obscene that the poorest among us are without shelter and food in one of the wealthiest countries in the world. And though millionaires and billionaires can’t be expected to pick up all the financial slack, paying their fair or fairer share — however it happens — is a start.
